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Planning for unexpected retirement costs

September 22, 2020

Retirement should be a time for rest and relaxation. But retiring isn’t always that simple. There are some costs you might not expect. Here are some expenses you might want to look out for when you are planning for retirement.

Overlooked health care costs

The average couple who retires at age 65 will need around $285,0001 to cover healthcare expenses. Unfortunately, many retirees don’t plan for the amount of care they’ll need to cover the costs of their health care in retirement. They may also fail to consider certain costs like dental work and vision issues. 

Retirees may also not consider ways to cover these costs beyond traditional retirement income. There are a few options out there that can help with this. Life insurance offers accelerated death benefits2, for example, that can provide access to a portion of a policy’s death benefit during your lifetime.

Another option is a fixed index annuity, which can help create a foundation of conservative growth potential and a guaranteed stream of income payments for as long as you live.

Medicare costs

A common misconception is that Medicare will pay for all your health care needs in retirement. The fact of the matter is that it likely won’t cover all your costs. Medicare doesn’t mean completely free health care. It doesn’t pay for most dental care, hearing aids, and other issues that could potentially arise, and it does not cover long-term care.3

You also have the option to buy a supplemental Medicare health insurance plan, also known as Medigap. Paying for supplemental policies is simply another expense that you might not have imagined paying when you retired. 

Home renovations

Retirees don’t always think about how aging affects the way they get around in their home. As you get older you may find you need to make your house more accessible and safer to move about. Stairs, steps, and narrow hallways can be difficult to navigate. It may be harder to use knobs or reach cabinets. You may require a walker or a wheelchair. There are a variety of common house features that may need to be altered to accommodate your limitations as you get older. The cost of renovations will vary depending on the size of the project. 

Long-term care

Retirees don’t always think about long-term care, but it’s a reality that needs to be considered seriously. As mentioned earlier, Medicare does not typically cover long-term care, which means you’ll need to find a way to pay for it. The costs associated with this kind of care can be steep. Long-term care insurance is one way to afford it, although the policy will also cost you.

A long life

People simply live longer than they used to. You get to spend more time with loved ones, however, it can also greatly affects your estimated expenses. You’ll need more money for health care if you live longer and that may stretch out the money you’ve saved. Living longer also means that there’s more time for inflation to set in, which can chip away at the value of your retirement savings. Make sure to consult with a financial professional to discuss your options.

1.Source: Barron’s, 2019

2.Accelerated Death Benefits are subject to eligibility requirements.  The death benefit will be reduced by the amount of the death benefit accelerated. Since benefits are paid prior to death, a discount will be applied to the death benefit accelerated. As a result, the actual amount received will be less than the amount of the death benefit accelerated.  An administrative fee is required at time of election. 


Texas Residents:Receipt of acceleration-of-life-insurance benefits may affect your, your spouse’s or your family's eligibility for public assistance programs such as medical assistance (Medicaid), Aid to Families with Dependent Children (AFDC), supplementary social security income (SSI), and drug assistance programs. You are advised to consult with a qualified tax advisor and with social service agencies concerning how receipt of such a payment will affect your, your spouse’s and your family's eligibility for public assistance

The term financial professional is not intended to imply engagement in an advisory business in which compensation is not related to sales. Financial professionals that are insurance licensed will be paid a commission on the sale of an insurance product.